Do Older Workers Affect Productivity?

According to “The Impact of Population Aging and Delayed
Retirement on Workforce Productivity” from the Center for Retirement Research
at Boston College, the two main reasons for the increase in older
workers is the size of the Baby Boom generation and labor force participation rates among those ages 60 to 74 have increased.

Gary Burtless, author of the paper, said, “There are
enormous differences between the labor force participation rates of older
Americans depending on their level of schooling. Research shows that people
with limited education have low employment rates in old age, while those with college
and advanced degrees tend to remain in the work force longer.”

If less productive workers selectively exit the work force
at younger ages, he said, the average productivity of the older workers who remain
may compare favorably to the average productivity of the young. A surge in the
percentage of the potential work force that is old may simply increase the
proportion of the workforce that consists of comparatively skilled older
workers.

“If worker productivity has been harmed by the
surge of older workers into the labor force, the fact is not evident in the
earnings statistics for the elderly themselves,” said Burtless.

He explained that using hourly wages as a standard benchmark
for measuring individual worker productivity, research showed workers
between ages 60 and 74 are currently paid more than an average worker who is between
25 and 59. The hourly pay premium for older men was about 20% in 2010 and about
10% for women.

Burtless added that while other benchmarks show a somewhat
less favorable picture, all show considerable improvement in the relative
position of aged workers compared with the nonaged. None of the indicators of
male productivity, he said, suggest older male workers are less productive
than average workers who are between 25 and 59.

“The expectation that older workers will reduce average
productivity may be fueled by the perception that the aged are less healthy,
less educated, less up-to-date in their knowledge, and more fragile than the young,”
said Burtless. While these images contain some grains of truth, he said, they
do not necessarily describe the people who choose or who are permitted to
remain in paid employment at older ages.